Faisal Sherwani is Advocate-on-Record, Supreme Court, and is currently a Partner in the Dispute Resolution practice at L&L Partners Law Offices, New Delhi. He graduated in 2009 from the Law Faculty, AMU as second in his class. He gained his LLM degree in 2010 from the George Washington University Law School, Washington DC, which he attended on a law school merit scholarship.
Q. What are the practice areas that you specialise in? Could you talk about some of the most interesting cases that you have worked on and which proved to be either great learning experiences or turning points in your career?
Well, my practice areas are all a bit broad. And so, in an attempt to justify the rather wide variety of work that I do, I take constant refuge in Lord Henry Brougham’s famous quote: ‘a lawyer must know everything about something and something about everything’. I am quite certain that he had a dispute resolution lawyer in mind, for the simple reason that despite our tastes for a particular area of law, more often circumstances deny us the luxury of solely concentrating on one subject.
Nonetheless, I have no particular regrets and in many ways I find the quote to be an extremely apt exposition of how well-rounded a lawyer should be. While we are entitled to our preferences and inclinations, our duties as general litigation practitioners demand that we be equipped to speak and be able to advise on most issues rather than some.
So, as a dispute resolution specialist and a court-room practitioner, my responsibilities extend (or are confined, if you like) to advising and acting for clients on a range of issues and subjects such as constitutional law aspects, arbitration laws, corporate, commercial and insolvency laws, labour legislations, technology and gaming laws, white-collar crimes and penal laws.
There are a number of matters that I have enjoyed working on, appearing in, advising on for one reason or the other. I wouldn’t want to mention all of these in extenso here. But for the record, I thoroughly enjoyed and fondly recall appearing before the Karnataka High Court in the constitutional challenge to the aggregator rules (framed under the Motor Vehicles Act, 1988). I had advanced lengthy arguments over multiple days where there was a battery of senior counsels opposing us. The experience was the first of its kind at that time for me and I had found the whole process intellectually stimulating and professionally satisfying.
Q. What are the major challenges that lawyers usually face in cases pertaining to corporate and commercial litigation?
There are a number of real and pervasive flaws in our dispute resolution processes, I think that is no secret and we must be willing to accept these. Take for instance, the impulsive and almost reflex grant of injunctive directions in the adversarial process. This is a less than desirable approach, and in the context of disputes having a commercial flavor, it leads to a number of unwelcome consequences for business and commerce. Equally, this poses a challenge to lawyers who seek to attain a particular outcome for their clients in a speedy manner.
To my mind, this approach by and of itself poses a huge disincentive to foreign investment – as delays in enforcement of commercial obligations signal irreparable losses in the form of lost time, money, energies, planning but most of all business opportunity.
And if you look at it qualitatively, these issues have been left un-debated by the Indian legislator as well as unaddressed by the Commercial Courts Act, 2015. A look at the legislative history behind the Act reveals that the considerations which weighed with Parliament had more to do with attaining a higher ranking on the populist Ease of Doing Business Index, (now referred to as the Doing Business Reports of the World Bank) rather than addressing the more overt issues that plague our system of justice dispensation.
For me it is somewhat peculiar that a parliamentary legislation meant for the whole of the nation was to be designed – quite simply, to satisfy parameters on the DBR. The Act as also its implementation has only complimented the superficial intent behind the legislation. It is not surprising that the sclerosis that has set in the mechanism for commercial dispute resolution has been left unaddressed. After all, legislatures are expected to frame laws that address the real needs, desires and wants of the people.
Any legislation, carefully tailored to attain a higher ranking on a notional policy indicator, is quite likely to fail us rather than not. There are a number of glaring gaps in the Act which are difficult to miss. Take for instance Order XX Rule 1 of Code of Civil Procedure, 1908 (“CPC”) (which mandates pronouncement of judgments within a period of 90 days from conclusion of arguments) or Order XVA Rules 1 to 8 of CPC (which prescribe timelines for case management hearings in commercial disputes), both as amended by the Schedule to the Act fail to indicate recourse in the event of failure to comply with their respective mandates.
Then take for instance steps such as digitization of filing procedures or updating computer software for ease and convenience of the judges introduced by the Ease of Doing Business Reforms 2019. All of such steps, while laudable, have little to do with the root cause of the problem, which is the approach of our courts while adjudicating a commercial dispute. The somewhat mechanical fashion in which the average Indian court grants interim orders and injunctive relief pending adjudication is an obvious vice. Such an approach has not been uncommon in the context of commercial matters either.
The parameters considered by the commercial courts while adjudicating applications for grant of injunctive orders are derived from the principles laid down in the Order 39 Rule 1 and 2 of the CPC, which provide for a rather subjective criteria, and in turn make the application of the underlying principles susceptible to varying interpretations and results. Seasoned lawyers agree that more often than not, it is possible to argue a case either way on such parameters. This makes the system unpredictable.
While you may argue that the said principles have stood the test of time, the applicability of the same to the modern commercial matter while granting interim relief like stay orders may cause quick disenchantment to a party that has invested time, money and energy in a commercial prospect. Needless to mention, commercial contracts and arrangements today are fiercely negotiated, and a party may rightly feel entitled to bear witness to the sum of the arrangement being implemented in the form bargained.
For such reasons, ready judicial interference in business arrangements, which are subject to a commercial dispute by applying subjective criteria may itself result in harm, irreparable in many a sense. The common jurisprudential standpoint has been that injury and harm caused to an investor is compensable in monetary terms on final adjudication. Most businesses would fiercely disagree. The fact is monetary compensation often does not cover the opportunity costs, time and energy expended or even reputational damage.
If we truly wish to make a difference, we must address issues we already know to be the source of the problem. And I say this with no false sense of humility – that the real flaws in the commercial dispute resolution mechanism lie in the overt issues, which the average Indian lawyer is a bit more familiar with than any international body that hands out rankings on artificial criteria.
The first step may be to sensitize the judicial officer in what goes into making a business and how fragile a business environment indeed is. I don’t mean to suggest outright disinclination to interfere where necessary. But possibly, departing from the norm that is the ready interference with commercial transactions and commitments in the first instance often, ex parte and with little hope of such decisions being practically revisited till the time of final adjudication.
Q. What do you perceive as the major challenges in ensuring a more robust mechanism for the enforcement of law and punishment for white collar crimes in India?
Well if we talk about the practice of white-collar crime in India, there is an increasing realization among professionals that the system lacks the mechanism to grant a pardon or some form of leniency. For instance, if a responsible corporate were to conduct its own internal audits and checks and consequently were to come to a conclusion that certain irregularities may have been committed in a branch of its wide-ranging operations, the system must permit such frank and honest disclosures to be made, without fear of excessive prosecution.
This is only possible if the system can intrinsically accommodate the possibility of a financial settlement while ruling out stringent prosecution and incarceration as a necessary and unavoidable consequence of such disclosure. In other words, we must have a mechanism that encourages private enterprise, high ranking officials, employees to come clean and admit corporate guilt.
The penal process can certainly involve imposition of heavy penalties in order to ensure an element of future deterrence. Possibly, in many a case, deterrence, even retribution, may be accomplished by imposing a financial penalty which is a high multiple of the actual amount that is the subject matter of any supposed malfeasance or irregularity. In such scenarios, where there is an admission of guilt in some form or manner and a financial penalty has been imposed, the more stringent penalties such as incarceration ought not to be pressed further.
It should come as no surprise that today, a number of corporations have their own robust internal checks and carry out regular audits in order to verify and correct any issues, allegations or suspicions relating to fudging of accounts, corruption and any other financial offences or irregularities. Such a culture of internal investigations is really something that should be celebrated and encouraged.
At the same time, such entities must be afforded the safe harbour of arriving at a possible resolution with financial consequences/ penalties with the investigating agencies and the prosecution, of course under the aegis of the State and the regulations that may be framed in this regard. We can learn from the example of the United States where the US Department of Justice (DoJ) as well as the Securities Exchange Commission (SEC) permit a private party to enter into an Agreement for Non-Prosecution i.e. subject to such a party arriving at a financial settlement.
Reality is, the existing mechanism, i.e. granting a pardon to an accused and plea bargaining under the Code of Criminal Procedure, 1973 are entirely incompatible with the scenario I have discussed. At the end of the day, we need to ensure that our penal laws are capable of effecting the right amount of deterrence without running to extremes and endangering liberties, particularly for offences such as these, i.e. where no blood has been shed and amends can be made in numbers, be it rather large sums.
Q. The Arbitration scenario in India faces criticism for not being up to the mark especially in comparison to some other countries. What do you have to say about the Arbitration mechanism in India and its comparisons to countries like Singapore, London, etc.?
Of course, London has been an important destination for international commercial arbitration but the last decade has seen a rise in the importance of Singapore and even Hong Kong as coveted destinations and seats for international commercial arbitration. I understand that enforcement is more a matter of administrative procedure in these jurisdictions.
But I think the amendments in 2015 and 2019 to the Arbitration & Conciliation Act, 1996 in India too demonstrate the conviction of the legislature to make India an arbitration friendly jurisdiction. Apart from that there have been a range of pronouncements from various courts that mirror this theme.
Also, there is some amount of legislative and judicial sympathy today towards the sentiment that there should be minimal judicial interference in the arbitral process. Further, there is an increasing realization that ‘party autonomy’ should play the pivotal role. Also, I think more importantly so, the expression itself has developed a more profound meaning over the past decade. Courts have exercised noticeable restraint while reviewing arbitral awards.
Take for instance, the pronouncement of the Supreme Court in Vijay Karia v. Prysmian Cavi E. Sistemi SRL & Ors., earlier this year, where the court reiterated the limited grounds on which enforcement of a foreign award could be resisted and allowed enforcement even at the cost of supposed violation of the provisions of FEMA. It also clarified that for a foreign award to be unenforceable as being in contravention of the fundamental policy of Indian law, as stated in Renusagar Power v. General Electric Co. (1994), it must involve a breach of a legal principle or legislation that is so basic to Indian law that it is not susceptible to being compromised.
So we have come a long way from the time of Phulchand Exports (2011), when the court had bestowed a broader meaning to the expression ‘public policy of India’ as used in Section 48(2)(b) of the Arbitration Act and had held that a foreign award could be set aside if it was patently illegal.
That apart also, I think we can agree that the NY Convention and some other measures have brought a strong underlying uniformity to international arbitration law by providing a broad rule of enforceability of arbitration agreements and by standardizing the grounds for refusing recognition or enforcement of foreign arbitral awards.
Of course, there is room for improvement and further changes. After all, the convention did not provide an all-embracing regulation of international commercial arbitration. Instead, it preserves a substantial role for diverse national laws, such as on issues as to how those grounds are to be defined.
You must make some room in your heart to digest the idea that forestalling enforcement of an award on grounds that it is contrary to ‘public policy’ of a nation is something that would, I think have to – necessarily be defined by the municipal laws, in line with the aspirations of the people of that nation. So some amount of leg-room in this regard is possibly necessary.
To begin with, it would be good if nations and the policy makers within those nations be ‘ad idem’ on the broad principles on which we can agree to refuse enforcement or recognition of an international award – mind you, there are countries that still disagree about this even today. India in that sense is far more uniform and ad idem with the other nations that follow the UNCITRAL model.
Thus to my mind, if there is a general consensus on the basic principles, we can continue to learn from each other’s experiences and precedents also. And maybe on many a threshold, concepts such as ‘public policy’ can mean the same things to us. But on the few fine points that we disagree, we can continue to respect those diversities and move forward.
Q. Also, Alternate Dispute Resolution is being perceived as being immensely helpful in lessening the judiciary’s burden. In your opinion, what is the future of ADR in India?
Indeed, alternative dispute resolution (ADR) mechanisms have numerous benefits and must continue to play an important role in the times to come. Reducing the burden of pending cases before the courts is certainly a well-documented and widely acknowledged by-product of the cultural acceptance and receptiveness to these mechanisms.
After all, there can be nothing better if both parties to an adversarial process can leave satisfied (as far as practically possible), by reaching an amicable solution of sorts, say by a process of mediation or the like. The traditional process of court-room litigation often does not afford such happy outcomes, where more often than not, the result will serve as reason for satisfaction to (or vindication of the position of) one party alone. And therefore, to such an extent we must continue to bestow unflinching faith and hope in ADR mechanisms.
But I might add (particularly, since I laboured, quite a bit – on the issue of commercial and corporate litigation above) that the adoption of ADR ought not to be on account of an inherent lack of faith and confidence of corporates, businesses or even the common man in our traditional courts of justice. If that be so, I would suggest it is a troubling trend.
Our traditional justice delivery system must too, continue to offer a robust and dependable mechanism, and serve as the primary system of justice dispensation. Indeed, parties may continue to be at liberty to settle disputes that are of a private character between themselves by ADR, or for that matter – by any other method that suits their fancy!
But sometimes the supposed reasons that are touted as justifications to opt for ADR (i.e. that these mechanisms furnish faster, more cost effective, easily accessible, and more receptive processes, and also, furnish brighter prospects for amicable resolution) – often end up sounding like somewhat of a hidden apology for the state of our traditional judicial system. In other words, if these mechanisms are to be taken as the only viable medium for dispute resolution, then that honestly does worry me. After all, any system of justice dispensation (the traditional courts included) should strive to inculcate the aforementioned virtues and attain such ideals.
The reality is that many commercial enterprises and corporations elect to adopt ADR mechanisms as also to arbitrate their disputes on account of the intrinsic belief that the traditional judicial system would be ill-suited owing to its characteristic slow pace and cumbersome processes. There is something to reflect upon there, as also to be a little concerned about.
Q. You have done LLB from India and LLM from US, both from premier institutions. What was different about reading law in the US than in India? What can law schools in both countries learn from each other’s education models?
In the final years of my studies at the Faculty of Law at Aligarh, the idea of studying further at the George Washington University presented an exciting proposition. While there were many differences, a student belongs in a university and a university, to a student. So transition wasn’t a problem, at least to my mind.
But I suppose we can all learn from each other, and the same is true for universities and education. Many exciting changes are happening everywhere in the sphere of legal education. But, the one thing that I have learnt to admire is an age-old technique i.e. the Socratic method, where the classroom experience is a shared dialogue between the teacher and students, thereby ensuring that both are responsible for pushing the dialogue forward through questioning. Of course, this requires as a pre-requisite, some amount of reading and thought on the part of the student also, so that it can be an informed debate.
In the larger scheme of things, the method has more particular benefits in the domain of law and legal studies. If you think about it, the practice of law is premised upon it – there is a constant exchange between the client and his advisor, an exchange between the lawyer and the Bench, an exchange between the legal expert and the media. So, you must learn to be communicative and expressive. And there has to be a continued emphasis on writing too. I confess that I have a personal prejudice in favour of those who write as it provides me the opportunity to see what your thoughts are and how you express them. As long as these underlying principles and methods remain, you can always explore and adopt new modes of executing them and enhancing the experience.
Q. You often write for various publications on different subjects pertaining to the laws. What are the issues of jurisprudence that you find to be the most interesting, especially as a practicing lawyer who may come across some of them while researching?
Well, writing is certainly something that has been a passion. I think if you were to look closely, most of my works grapple with the realities of our times and ideals that we aspire to attain. You are right, as a practicing lawyer, you find yourself in a unique position to comment on legislation, precedent, the state of the justice delivery system, and more generally on issues that affect us citizens and as a polity. In fact, much of the thoughts that I have shared with you on commercial litigation and its future are quite well documented in an earlier published piece that I wrote with a colleague. I might add that I don’t consciously limit myself to any particular subject, but rather feel free to write on issues where I have noticed a problem, lack of clarity, or even hypocrisy. It is here that I seek to provide my own perspective. More recently, I have started to explore satire as a useful tool of communication. If something can make you think and laugh at the same time, in my view – that is a job well done! So, you will generally find me engaging on issues related to law, our polity and other socio-economic issues.
Q. What do you like to do when you’re not working? Lawyers usually keep very busy. Have the pandemic-induced restrictions given you the opportunity to relax and unwind more often?
Primarily I enjoy reading. It follows, I think, a somewhat indiscriminate yet eclectic pattern. My earliest recollections of being hungry to read was in order to develop and inculcate a critical and analytical approach. Quite simply, this is my approach to law and life itself. And in very many ways if you choose to develop it, this interest will form the basis of your capability to frame and hopefully thereafter, formulate your own judgments and opinions. I can speak for myself. It has very much been so.
That apart, I have always had a taste for travelling. However, the current pandemic has seen the introduction of a ‘monkey-wrench’ in most of my more recent plans.
But not all is lost. Circumstances have generously furnished abundant time and opportunity to write as I mentioned above.